Autore
Wai, Sebastian

Titolo
Software quality and backward compatibility in the video game industry
Periodico
Economia e politica industriale
Anno: 2022 - Volume: 49 - Fascicolo: 3 - Pagina iniziale: 545 - Pagina finale: 570

The video game industry is a platform market in which consumers derive value from a console based on the availability of software. This article examines the role of the quality of software in determining sales of associated hardware. I investigate this using data on the seventh generation of video game consoles (Xbox 360, PlayStation 3, and Wii). Using aggregated review scores from Metacritic, I build a novel measure of accumulated quality for both current-generation and backward compatible software for each console. Using an instrumental variables approach, I estimate the effects of these quality measures on weekly console sales. I find that overall software quality has a significant positive impact on hardware sales, while backward compatible software has a much smaller positive effect. Additionally, I incorporate a reliability measure into the estimation and discuss the console industry in the context of platform markets and durable goods.



SICI: 0391-2078(2022)49:3<545:SQABCI>2.0.ZU;2-Y

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